'Middle class earners' - struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000- Guardian

[fluffykittens208]

https://www.theguardian.com/business/2024/mar/04/middle-class-workers-mortgages-bills-tax

Excerpts:

'Scott was just one of scores of middle-class earners who shared with the Guardian how they are struggling to cope financially and can no longer afford comfortable living standards despite having household incomes of between £60,000 and £120,000.
A report last month from the abrdn Financial Fairness Trust highlighted how Britain’s insecure jobs market and high housing costs are leading to the growth of a precarious middle class. These households are struggling to maintain a decent living standard on joint incomes as high as £60,000 a year. That compares with the median gross annual earnings for full-time employees of £34,963 last April.'

“It does seem that the only way to be on a middle income and doing OK at the moment is to be a Dink and living in the north.”

'Although respondents with children reported more precarious finances than those without, millennial childless couples say they barely have any disposable income either.'

Personally we am coping ok with a household income of £120k and still eat out/have a lot of city breaks, but I wonder if that is only because of our specific circumstances

1. small 2 bed flat in zone 3 London so we don't have a car and where it is possible for DH to cycle to work. Would probably always stay in a flat even if income doubles so it makes more sense to stay in zone 3 if living in a flat.
2. were able to live at DH's mum for 3 years while working in London and bought in 2019. We were able to overpay a mortgage on 2% interest during the pandemic and plough our pandemic savings into it which means the new mortgage rate isn't as painful.
3. fertility problems so we are still DINKY and unlikely to have more than 1 child (am already 32 this year).

As a disclaimer i don't think the chancellor should cut taxes despite us all feeling the cost of living crisis as 40% of tax revenue comes from NI and income taxes so if they cut taxes, they would have to cut services and I have no desire to pay for healthcare privately in my old age.

But it feels very strange to read about people struggling in the news on our household income, probably means that the income threshold to be 'comfortable' (without very specific circumstances that lower your cost of livin) is much higher! Would hazard around £150k to £250k now. Basically we are going to be a hugely unequal society where only the top 5% can expect all the middle class fixtures and the rest of us have to pick and choose or live a life of penury and no luxuries i.e. car or property in expensive location; 2 children and no savings or 1 child and savings. Far luckier than those in the bottom 50% obviously but i am not sure how you can say you are middle class when the only reason you can afford to eat out and have nice holidays is cos you purposefully cut back on things people used to expect if you were doing semi well i.e. 2 kids in a suburban semi and a car on the driveway.

Comparing gross income is totally pointless. There are so many factors involved that mean that 2 families on the same gross income can end up with significant different disposable income afterwards.

Factors such as rent/mortgage costs, whether they are paying towards pensions and of so how much, childcare costs and what help is available, whether they pay or receive child maintenance, university grants repayments etc, etc...

So yes, you can be on a high income and worse off than some families recieving benefits.

For people saying they can't manage ,and those on much less can shows the disparity between them. Surely on these higher figures most people have got used to a good standard of living and could cut back or move down .the Lower wage earners don't have that luxury

Ultimately living there is a choice though. I appreciate that sounds harsh, but if you are earning 120k and you choose to waste loads of living in the most expensive part of the country instead of somewhere cheaper I don't think you can complain about how skint you are, because you could choose to live somewhere so expensive that you financially struggle.

I am disabled so I'll never be able to get more then I get and releastically my income will go down as my kids leave and being able to choose to live in London just wont ever be on my radar and I'd love to live closer to London.

People who think they're struggling on larger salaries either have never had to or forgotten how to manage on a small one. If you look at expenditure a lot of it is choice, Cars, holidays, hobbies, area they live.
we have an joint income of around 120k, we have a very nice life with all of 3 of us having hobbies and days out etc. when my DD was a baby we had a join income of about 40k, we still were ok, less holidays, 1 car. Could be more difficult with more kids.

Two adults both earning £60k bring home £7k pm net.

You can't buy a 4 bed house where I live for less than £450k and if you have little equity and didn't lock your mortgage rate you could be paying over £2k on that.

Basic bills including travel into London are £1500.

Childcare for a preschooler costs £2500, maybe you have a second one at school needing wraparound care?

There's not much left for food, social activities, holidays etc.

Every month you're a car breakdown / new boiler away from disaster and wondering why with a household income of £120k you are permanently thinking about money, can't afford a foreign holiday or a third child and have no savings.

But what benefits do you get to top up that salary? And people on 60k will be paying a lot more tax proportionally to you, especially once you add in any benefits you receive.

I live in the South East - Southampton to be specific.

My house is valued at around 200k. 2 bed terrace close to city centre. I have relatives nearby who commute by train to London daily.

Sure the annual train fare is pricey, but anyone earning over 50k pa should be more than OK !

That Guardian article is laughable. Those people have made expensive choices. They could live somewhere a hell of a lot cheaper and save thousands even with commute costs.

Nonsensical.

I fully agree that that one is debatable although there is a cultural difference between middle and working classes there in that the working classes, especially the new immigrant WCs, are more likely to have extended family/friendship networks who take on some of the childcare.

Mostly though, in my humble opinion, the current 'plight' (as the Graun would have it) of the middle classes is down to two things - cheap debt and globalisation.

Globalisation started to take off in the mid to late 90s, alongside cheap debt, enabling the middle classes to improve their lifestyles by taking out debt against properties skyrocketing in value. Globalisation meant cheaper credit card debt, cheaper access to things such as nannies, cleaners, cheap holidays. This lulled many of the middle class into the false assumption that this was the new normal and that their lifestyles were sustainable.

The bubble burst in 2008 and the nationalisation of the banks and especially QE, led to asset prices skyrocketing so the middle classes felt even better. But you can't have assets skyrocketing and rock bottom interest rates forever, it's just not a 'normal' economic paradigm, even though many western governments and even economists (who should know better!) did say it was. But at some point inflation's gonna come in and eat the middle class's Waitrose lunch. And that's what's happened.

Ironically and as many posters have pointed out, a couple in working class jobs with two kids who granny picks up from school, leaving in a £140k house in the north east, will have a better standard of living than a young professional in a £900 per month house share in London trying to make it at one of the Big Four in a job which will soon be AI'd out of existence, who's saddled with uni debt and can't afford a house, or kids.

the next 20 years will see a huge shift in the social class structure of western countries and with that, a huge effect on who has the most cultural and political power. We are already seeing this starting to happen.

I’m surrounded by people who are ‘struggling’ but the kids are in private school, Go ski-ing, travel every school him break etc.

’struggling’ is very subjective! we are not struggling ( high earners) but are fucked off that everything costs so much and nothing seems to work probably.
If I ever say I’m ‘struggling’ I’ll punch myself in the face.

Is that £20k per year including all the benefits top ups?

People saying living in the SE is a choice - a lot of the time it’s not.

My job doesn’t exist outside of London. And if I switched to a related job then my earnings would drop by about 75%. An alternative would be living outside London with a massive expensive commute, which would mean I’d need to spend more on childcare as I’d be at home even less, negating a lot of the savings from a lower house price and massively impacting quality of life for me and my kids.

None. I am disabled. That is my entire income. If I am lucky I manage to do a bit of work and top up my UC / PIP with £20 here and there. Some months I don't manage that. Some months I have a better health month and make myself £200 on top. Never more.

Yes

@Universalsnail how much rent/mortgage do you pay out of that?

Housing costs have caused so much damage

How though? Looking at house prices in Lewisham it's at least £500k for just a 3 bed. I'm on a similar salary to you with no kids but banks will still only give me a 300k mortgage and its impossible to save 200k deposit. Or did you buy years ago/get parental help/inheritance and now like to wonder why everyone else can't be in the same position as you?

2 kids x £1500 =£3000 a month in childcare costs alone. If you currently save £3000 a month then yes, you can wonder why other people on the same income as you can't have the same lifestyle. Otherwise, I don't see the point in your post.

Also, yes, people live on far less. But if you're on 22k household income, you don't send your kids to nursery, so why compare yourself to people who have to do it if they want to stay in work?

Even with top ups I doubt it is anywhere near £60k.

It was obvious such low interest rates were not sustainable. I am surprised they lasted so long.

That money may not go as far now but 120k puts you in top 5% income wise. I can therefore conclude that Scott is a whiny irritant and I would love him to come and see how some of my service users have to live. Not a race to the bottom but just so he can see what it’s really like.

i agree with this. A big reason for my standard of living being ok despite being on the £120k (which is now apparently considered a squeezed middle class income) despite being a young professional in London is cos i married a Londoner whose mum allowed us to live with her. Many of my colleagues who have houses and kids come from immigrant backgrounds and lived with parents until they married (and bought a house) and also rely on parents for childcare. So they have london salaries but only really the london mortgage to worry about (and higher equity than someone who had to rent). Much better off than a northerner who has to pay for childcare.

When the state fails, the family has to step iin.

The ability to live comfortably on a high income obviously depends on your outgoings. If you pay south-east housing costs and childcare for perhaps two kids, and need a car or two, your entire income will go on these basics even if you earn 100k. You won’t feel ‘comfortable’ in the sense of having much disposable income.

Completely different if you earn 100k, live in a cheap area and don’t pay for childcare. Then you’d feel rich. Our household income is around 80k, we have paid off our mortgage and have no childcare costs. We feel comfortable but we still can’t afford fancy cars, clothes or holidays.

£300 a month so luckily very little

Think some people genuinely are struggling with huge mortgage and childcare costs, especially while kids are in nursery. While others have always had a privileged life and have a warped idea of what struggling is, or like to seek sympathy (thinking of my ex, who lives mortgage free and has a salary of over 100,000 but since splitting up has complained he is unable to afford to buy a washing machine or chicken for our son). Without knowing others' individual circumstances and unavoidable bills I don't think we can predict how hard things are based on income alone.

scott is on 75k with a non working wife and two children. He is only 28 years old though so i suppose when you have children younger it is harder. when i married at 22, i was super poor too! Mainly cos most people nowadays don't marry in their early 20s just like most men don't have kids in their 20s nowadays.

@CantDealwithChristmas thanks for mentioning QE, it’s almost never mentioned as one of the main culprits of the mess we are in today.